Inheriting property by NRI

Inheriting property located in India, by a non- resident, can sometimes be a confusing task to handle, particularly for persons who have been away from India for a long time. NRIs who inherit property may find themselves faced with questions such as: 1. Legality of ownership 2. Are taxes to be paid? 3. Sale of the inherited property 4. Repatriation of the sale proceeds, etc.

Who can inherit immovable property

in India

There are some instances, where Indian residents tell their non-resident relatives that they cannot inherit property in India, as they are foreigners. However, this is certainly not true. Anyone can inherit property in India, whether they are persons of Indian origin or not. Even foreign nationals, who may have not even visited India, can inherit Indian property. NRIs can inherit not only residential and commercial property, but also plantation and agricultural lands. Even though agricultural land and plantation property cannot be acquired by NRIs by way of gift, they can legally inherit it. The only exceptions here are: 1. Foreigner of most countries can inherit property in India without any RBI permission. However, citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan must seek prior approval from the Reserve Bank of India. 2. In cases where the property is being inherited by a person who is resident outside India, there is a condition that the property must have been acquired, in accordance with the foreign exchange (FEMA) applicable laws that were in effect when the property was purchased. Clarification: A person who bought property in contravention of the foreign exchange law in force or FEMA regulations, applicable at the time of acquisition of the property would not have owned the property legally and hence cannot pass it on by way of inheritance to anyone.

Tax when inheriting property

Inheritance tax is commonly known as the Estate Tax/Duty in India. This type of tax was introduced in the year 1953, and was abolished in 1985, when Mr. V P Singh was the Finance Minister. Currently, when inheriting property, there is no inheritance tax in India.